Amazon’s decision to cancel its New York headquarters investment has led to intense debate among academics, politicians, and civil society. The split culminated Amazon’s very public search process in which 238 U.S. cities submitted detailed bids to the company to host its “second headquarters,” or HQ2. Many of these bids remain secret, shielded from public records laws due to exceptions to public disclosure of economic development projects, or the use of non-public entities, such as Chambers of Commerce, to submit the bid. But for 26 publicly-released bids, we have a rare opportunity to peek under the hood of U.S. regional economic development. Here are five main takeaways from a review of these bids.

1. We know more about HQ2 than most economic development deals.

Many journalists and civic leaders expressed frustration over the lack of transparency in the HQ2 process. Few cities provided the full details of their offers during the process, and cities such as Austin, Denver, Indianapolis, Houston, Los Angeles, and Miami have still not made their proposals public.

Yet the reality is that most corporate site selection processes remain outside the public eye. The fact that Amazon made this a public competition led to additional scrutiny of the site selection process. Numerous local journalists, such as those in the Dallas and Denver areas, were able to explore local proposals and reveal more about this process than most other economic development deals.

2. Economic boosterism is dominated by the boosters.

City Amazon HQ2 bids came from a variety of sources, ranging from formal economic development offices, standing non-government organizations such as Chambers of Commerce, or—in the case of Detroit—a nonprofit organization that emerged specifically for the creation of a HQ2 bid. Bids from the 20 finalists included submissions from all of these types of organizations.

Beyond these lead entities, many Amazon bids included an acknowledgement section and letters of support from elected officials, university presidents, CEOs, and other civic and nonprofit groups. It is hard to know how involved each of these letter writers were in putting together the bids, but at the very least, we know who definitely was not at the table.

Across all 26 bids, there was not a single letter from an environmental group, and few letters of support from organizations focusing on affordable housing. In only three cities— Pittsburgh, Philadelphia, and St. Louis—was there any endorsement from organized labor, and that was from the building trades. Other than these few letters of support, there is almost no evidence of broader community involvement in any of these bids.

Across all 26 bids, there was not a single letter from an environmental group, and few letters of support from organizations focusing on affordable housing.

In contrast, almost every bid had endorsements from business groups such as the Chamber of Commerce, as well as letters from large businesses in the area. Real estate developers often either provided endorsements or were central to the bid construction. Detroit’s bid, for example, was submitted by a non-public committee headed by billionaire Dan Gilbert. One of Gilbert’s companies, Bedrock, owns most of the land that would be sold to Amazon, and even included what amounted to a one-page ad in the middle of bid.

For critics of the HQ2 process, or economic development practices in general, these bids offer clear evidence that businesses dominate the “growth machine” in cities, with little role for the rest of civil society.

For critics of the HQ2 process, or economic development practices in general, these bids offer clear evidence that businesses dominate the “growth machine” in cities, with little role for the rest of civil society.

3. The only creativity was the worst type of creativity.

In Amazon’s request for proposals (RFP), the company encouraged cities to think big. But in most cases, the creative thinking was exclusively focused on incentive offers.

Cities varied in their strategic responses to Amazon, but many of the proposals only offered existing economic development incentives. For example, New York’s offer to Amazon, which used existing state and city programs, only scaled up to 50,000 jobs. New York’s state and city incentive offer for half of HQ2 has been estimated at $3.5 billion.

The largest incentive offers sometimes involved tweaking existing tax structures. For instance, Dallas offered an incentives package for a site near the airport that would last for 99 years. The state of North Carolina passed new legislation that increased the amount of income taxes that would be rebated to Amazon, a practice that Good Jobs First has called “paying taxes to your boss.” The irony of this approach is that many of the highest tax—and often most politically liberal—states offered some of the largest incentives to Amazon, opening up a significant gap between what Amazon would pay in taxes and what average businesses and individuals pay.

Many of the highest tax—and often most politically liberal—states offered some of the largest incentives to Amazon, opening up a significant gap between what Amazon would pay in taxes and what average businesses and individuals pay.

In some cases, cities baldly proposed using their location to exploit existing regulations. Las Vegas’ bid section, “Imagine the Possibilities”, put forward a number of ethically questionable propositions, shifting some of Amazon’s non-HQ2 activities—such as relocating Amazon airplane pilots (PrimeAir) from their operations in Kentucky—to “reduce labor costs by avoiding Kentucky’s personal income tax.” Similarly, Kankakee County, Illinois suggested some creative maneuvers to take advantage of the “Interest Income Deduction for Financial Institutions” incentives. The county’s bid suggested Amazon “incorporate a bank” to control their land as a way to take advantage of an incentive for financial institutions.

Chicago’s proposal made waves with a high-quality video pitch complete with a voice over from William Shatner. But Chicago’s bid, kept secret until the city was eliminated, was largely a marketing pitch on the values of the city and a package of incentives that harnessed existing programs. The one unique element was a pitch for $400 million in infrastructure improvements, although the details were hazy.

4. CitIes are used to competing, not collaborating.

In the RFP, Amazon asked for one application from each metropolitan area, hoping to incentivize regionalism. Although there were a small number of regional bids, there was very little regional collaboration. In the Greater Washington metropolitan area, the Northern Virginia suburbs, Maryland suburbs, and the District of Columbia all submitted separate bids. In the Dallas region, individual municipalities proposed competing incentive offers, including offering different Texas state incentives. Even New York’s winning bid had an odd tacked-on section for Staten Island that looked more like a cut and paste addition than a seamless regional pitch.

In some cases what looked like regional collaboration nevertheless fell short. St. Louis developed a bid with Illinois, providing details about sites on both sides of the Mississippi River. Despite renderings of an HQ2 campus in two states and on both sides of the Mississippi River, the incentive details in the bid assumed that all of the investment would be in either Missouri or Illinois.

Only a few standout cities offered honest collaborations. In Virginia, the state’s three city proposals (Northern Virginia, Greater Richmond, and Hampton Roads) had very similar structures (including the table of contents) that provided clear evidence of coordination. Letters of support came not only from local governments and public schools, but also from both the 2017 Democratic and Republican candidates for governor. Most impressive was Toronto’s bid, which included support from the province, as well as detailed letters of support from the different mayors from potential locations.

5. Not everyone played the game.

Numerous cities claimed that they would be disadvantaged by releasing their HQ2 proposal to the public, and some even claimed that they could not release it because of non-disclosure agreements with Amazon.

In reality, any non-disclosure agreements with Amazon came after the first round, and a few cities went public immediately with their proposals, including Boston and Toronto, two finalists.

Other cities did not oversell their communities. Most cities did their best to show off what is right within their communities, but some bids still attempted to turn disadvantages into a compelling pitch. Las Vegas opened with a comment about the recent shootings and how their community is trying to come together around that tragedy. Detroit and Newark pitched Amazon’s power to help revitalize their struggling economies. Baltimore’s proposal was partially framed as giving Amazon the opportunity to transform a community aligned with the company’s values on diversity. These pitches stood out in their honesty and, in many ways, made a compelling case.

Some cities also refused to play the incentive game, only providing a list of existing incentive programs. Even in the second round when Amazon requested additional details on the amount of incentives and their dollar value (with a 6 percent discount rate), cities such as Boston didn’t offer up those dollar figures. Although Virginia offered some firm-specific incentives, Brookings’ Amy Liu argues that many of these incentives were for broader infrastructure and workforce development.

And a few communities, such as San Antonio, simply didn’t put in an Amazon HQ2 bid at all.

There’s a better way to focus on economic development

These bids reveal that the HQ2 competition was largely based on a region’s ability to offer incentives.

The Amazon HQ2 process highlights what is both right and what is wrong about economic development in the United States. Cities and states compete with each other, often for investments in metro areas that span state borders. These bids reveal that the HQ2 competition was largely based on a region’s ability to offer incentives, with many locations providing the maximum amount of incentives that they could with existing programs, and a few cities and states, such as Maryland and New Jersey, passing special incentive legislation for HQ2.

But other HQ2 locations showed that there are other possible responses. A few cities, such as San Antonio, simply didn’t put in a bid. This is commendable for a city, but my own work shows that there is too much political pressure to expect most cities to sit out from these competitions.

One lesson to take away from the HQ2 process is that excessive secrecy and lack of community involvement in the construction of bids can backfire. As the New York example recently showed, powerful politicians and civic groups want a say in this process. Cities and states that provided bids without community feedback were not only missing the opportunity to improve their bids with community input, but they undermined the entire process when their communities determined the bids simply weren’t credible. Meanwhile, cities like Toronto and Boston provided full details on their bids from the beginning of the process. Ideally, these bids should include voices from the community representing labor, environmental groups, and affordable housing advocates.

A second and related lesson is that leading with investments as broader drivers of economic development is an attractive proposition for a company like Amazon. One of the winning bids—Northern Virginia—provided incentives that were smaller in scale than many of its competitors, but were more targeted to investments in workforce development and infrastructure. So if Amazon was simply trying to maximize its incentives package, it could have located a winner just a few miles away in Montgomery County, Md. and cashed in $8.5 billion in incentives.

And a final point is that the regional competition that we saw in places like the Washington, D.C. area or the competing incentive packages in the Dallas metro area stand in sharp contrast with strong regional collaboration in the Toronto area. This regional coordination was rare among these HQ2 bids, which makes it all the more valuable for communities.

In the end, many of these HQ2 bids looked very similar. Whether they were non-public bids influenced by the support of area businesses, or simply an attempt to harness every possible incentive dollar for Amazon, the lack of civic input was palpable. Cities and their residents deserve a more transparent and community-focused path to economic development. Perhaps if enough local decisionmakers understand that, the next time there’s a massive company sweepstakes underway, 238 locations won’t be pitching the same thing.

With the news of Amazon’s new headquarters in Northern Virginia, concerns arise around what rising real estate values will mean for current residents. Prior analyses have suggested that Amazon’s arrival will put additional stress on the region’s housing market, but that the metropolitan areacan accommodate the expected growth. In this article, we examine possible impacts on two neighborhoods closest to the National Landing headquarters in Northern Virginia—Arlington County and the City of Alexandria—which are likely to experience the largest direct effects. We focus particularly on economically vulnerable populations: low- to moderate-income renters who have few affordable options in the Washington, D.C. metro’s tight housing market. How resilient will current residents near National Landing be to rising rents?

Most National Landing residents can withstand rising rents

National Landing is a new name for the area around Amazon’s proposed campus, comprising part of several existing neighborhoods in southern Arlington County and the northern edge of Alexandria: Potomac Yards, Crystal City, and Pentagon City. About 24,000 people live within the six census tracts that make up National Landing.

Compared with the Washington, D.C. metro area overall, current residents of National Landing are highly educated and quite affluent (Figure 1). Nearly 90 percent have a bachelor’s degree or higher, compared to about 51 percent in the D.C. metro. Most of the affluent residents are young households without children, and have recently moved to the location. Renters occupy three-quarters of the housing in National Landing. Even before Amazon began its yearlong search, median rents in the neighborhood were relatively high compared to the D.C. metro area overall (around $2,000 per month in National Landing compared to just over $1,400 in the metro area, according to the most recent American Community Survey data). Because the current residents of Crystal City, Pentagon City, and Potomac Yards are economically well off, even if they face rent increases in the near future, they can probably afford decent quality housing in other desirable neighborhoods.

But National Landing is close to more economically vulnerable communities

The area immediately surrounding National Landing, known as Arlandria—a hybrid of the two jurisdictions’ names—is an ethnically and economically diverse community (Figure 2). The northern half of Arlington County is quite affluent. The neighborhoods around Metro’s Orange Line stations consist of expensive, high-rise apartments and condominiums. North of the Metro line towards the Fairfax County border are single-family neighborhoods served by some of the region’s best public schools. The southern half of the county, below U.S. Route 50 and where National Landing is located, has historically been more ethnically diverse and less affluent than North Arlington, with large Hispanic and Asian populations (Figure 3).

The City of Alexandria, which contains the southern tip of National Landing, is also economically and ethnically quite diverse, with a larger black population. Alexandria’s central Old Town neighborhood has an abundance of well preserved—and pricy—historic architecture. Alexandria’s northern and western neighborhoods, like South Arlington, have relatively large concentrations of “naturally occurring affordable housing”: older, garden-style apartments and small single-family homes that do not receive government subsidies but are nonetheless affordable to moderate- and lower-income families. Household incomes in Arlington and Alexandria vary substantially by race: black, Hispanic, and Asian families have significantly lower incomes than white families in both jurisdictions. Therefore, changes in the supply of affordable housing could have racially disparate impacts.

Figure 2 shows the share of housing units that rented for less than $1,500 per month in the most recent data. That is roughly the amount that a family earning 50 percent of the D.C. metro area’s median income could afford, if they spend 35 percent of their income on rent. These affordable neighborhoods and properties are likely to see rising rents—and possibly interest in redevelopment for higher-income tenant—as demand for real estate near National Landing grows. The residents of these neighborhoods—those with low to moderate incomes and lower levels of education, immigrants, and families with children—will face greater difficulty finding decent-quality housing that fits their budget.

As policymakers and business leaders in the greater Washington, D.C. region welcome the economic benefits from HQ2, they should also prioritize helping all residents share in those benefits. To maintain socioeconomic diversity, local governments across the region must plan for, and invest resources in, a diverse housing stock. There are three key prongs to a successful housing strategy:

Preserve existing affordability by acquiring below-market apartments. The substantial stock of unsubsidized, low-rent housing in both communities offers an opportunity for local governments and affordable housing developers to purchase properties, and put into place long-term affordability protections. This strategy is particularly appropriate in regions like Greater Washington, where developing new affordable housing is extremely expensive. Arlington’s Affordable Housing Investment Fund can leverage private capital to do this. The newly launched Washington Housing Initiative, a partnership between the Federal City Council and JBG Smith (the firm that owns much of Crystal City, now National Landing’s, commercial properties), aims to increase investment in affordable housing preservation.

Build more housing, more cheaply, in affluent neighborhoods. Moderate- and low-income neighborhoods in the Washington, D.C. metro area should not be expected to absorb all the demand for new, higher-cost housing. Over the past decade, affluent, mostly white neighborhoodsin the region have not built their fair share, even of market-rate housing. That needs to change.

Cooperate across jurisdictional boundaries. Amazon’s expansion will impact housing, labor markets, and transportation throughout the Greater Washington region. Local and state governments, corporate leaders, and nonprofit organizations need to move beyond lip service to regional cooperation, and commit to effective regional responses.

Amazon makes its choice(s)

After over a year of speculation and countless hours North American cities spent wooing the tech giant, Amazon made its final choice in the HQ2 competition this week: naming Arlington, Va. and New York City as sites for its next headquarters. Alan Berube makes the case that the decision came down to one big factor: talent. Meanwhile, Jenny Schuetz offers tips for how cities that didn’t make the final cut can improve their overall competitiveness and boost prospects for existing residents and businesses, beyond hoping for a rose from a billionaire suitor.

The Heartland: If not Amazon, then what?

Amazon’s choice of two coastal metro areas has added fuel to concerns that tech-driven “superstar” regions are pulling away from the rest of the country, leaving other areas behind. (Amazon did announce that it will locate a smaller operations center in Nashville.) So what can inland leaders do to ensure that they share in the next wave of prosperity? Mark Muro, Jacob Whiton, Robert Maxim, and Ross DeVol inventory the assets of the 19-state Heartland region (spoiler: they’re considerable in many areas, despite the common perception) and flag urgent human capital and innovation investments needed to ensure that the region delivers on its potential. (Another source for strategies and inspiration: Germany, according to John Austin, which is navigating its own industrial transition more successfully than the United States thanks to its markedly more robust approach).

2018 exit polls show greater white support for Democrats

While national coverage of this year’s midterm elections has focused on which offices and chambers are changing hands, William Frey’s analysis of exit polls breaks down the realities of who different demographic groups voted for to propel these leadership changes. Frey finds that younger, female, and more educated white voters fueled Democratic gains, representing shifts in white voter patterns from the 2016 election. Additionally, Frey finds that minorities represented a bigger share of all voters than in any previous midterm election.

The next wave of policy innovation? Look to the states

As Americans get a temporary reprieve from campaign ads and polls following last Tuesday’s election, newly-minted officials across the country are preparing to take office in less than two months. That includes 16 new governors in states including Illinois, Michigan, Minnesota, and Wisconsin, where transition teams are busy translating campaign promises and policy ideas into actionable plans for governing. Amy Liu explains why this is a big moment for city—not just state—leaders and how a more productive state-local partnership could help address the major social and economic challenges facing communities across the Heartland and the rest of the country. Adie Tomer and Joseph Kane, meanwhile, survey infrastructure proposals across states, and find indications that more forceful and expansive state infrastructure policies could take shape in the coming years.

Broadening the talent pool

Confronting the barriers that prevent young adults from disadvantaged backgrounds from accessing quality jobs matters both for boosting opportunity and helping regions prosper in the knowledge economy. So what can local leaders do? In new research, Martha Ross, Nicole Bateman, and researchers from Child Trends, a nonprofit focused on improving outcomes for children, unpack factors for success and offer practical recommendations—including placing a stronger emphasis on work-based learning, improving post-secondary completion, and expanding the role of positive, supportive relationships to drive better outcomes.

Responding to Pittsburgh’s tragedy with lessons of the past on inclusion

In response to the tragic events in Pittsburgh that claimed 11 lives in the deadliest attack on the Jewish community in U.S. history, Andre Perry discusses in an op-ed for the New York Times the lessons he took from growing up in a diverse Pittsburgh community of black and Jewish Americans. In the piece, Perry writes how places like Pittsburgh’s Tree of Life synagogue are powerful, but won’t be protected “as long as Trump and his followers continue to stoke the white nationalist’s greatest fear: inclusion.”

Though the cat’s been out of the bag for more than a week now, Amazon’s announcement this morning that the company will split its next “headquarters” between the New York City and Washington, D.C. regions sends a clear signal about what matters most to regions seeking to build a high-tech economy: talent.

Sure, the Long Island City and National Landing (née Crystal City) sites have a lot of other things going for them, too. They have buildings that Amazon can occupy quickly. They have excellent transit access. They are proximate to airports from which Amazon employees can access markets all over the country, and travel back and forth to HQ1 in Seattle (Amazon employees in Northern Virginia will literally be able to walk to Reagan National Airport). They’re in the Eastern Time Zone, arguably improving Amazon’s ability to work in the European market. And yes, Jeff Bezos owns homes near each site, as Scott Galloway notably observed.

But other than Bezos property, other finalists had several of these ingredients, too. Where they couldn’t match New York and D.C. was the deep tech talent pool.

Looking at all U.S. metropolitan areas by the number of people working in computer and mathematical occupations—a decent proxy for the nation’s tech workforce—shows that the New York and Washington, D.C. regions far outpace all others. Greater New York had 321,000 such workers in 2017, while Greater Washington had 264,000. The metro area with the next largest tech workforce, Los Angeles, lagged well behind at 173,000. To be sure, the San Francisco Bay Area is a mecca for tech talent, too, split between two metro areas (San Francisco and San Jose), but even together they only slightly outpace the D.C. region at 287,000 tech workers.

The critical importance of readily available talent to Amazon is evidenced by the company’s decision to split the next headquarters between two sites. Indeed, the answer to the first “frequently asked question” from Amazon’s press release states, “We can recruit more top talent by being in two locations.” Amazon may also perceive less risk in sourcing existing tech talent from within an expansion market, versus turning that market into a magnet for tech migrants, and placing even greater pressure on local housing prices.

The critical importance of readily available talent to Amazon is evidenced by the company’s decision to split the next headquarters between two sites.

That New York and D.C. have such considerable numbers of tech workers reflects complementary advantages in their efforts to attract Amazon. In New York, many of those workers are actually in the finance industry, and in D.C., many work in government. Both sectors represent key clients for Amazon’s services, so anchoring its expansion in these markets gives Amazon improved access to its customer base.

All this suggests takeaways for both the losers and the winners in the HQ2 contest.

Sure, it would have felt great to have Jeff Bezos crown you with the tiara and drape you in the sash. And yes, it’s galling to maintain that gracious fake smile while New York City and Northern Virginia bask in the audience’s admiration. Go ahead, have a little cry, maybe an extra scoop of gelato. When you get to the “what’s wrong with me, why didn’t he pick me?” stage of grief, here are some tips for moving forward productively (besides more gelato, which we strongly encourage).

Hit the books.

Smart is sexy. The best predictor of how well cities fare is their human capital: residents’ knowledge and skills. Upgrading the quality of local public education—from pre-K through community college—is probably the best investment you can make. Companies want to have well-qualified local workers available to fill a range of jobs—not just software engineers with advanced degrees. If Amazon plans to relocate some of its senior management to its second and third headquarters, those managers would like decent K-12 schools for their kids to attend. More education also produces more engaged citizens (known to mayors as “voters”).

Tone up your infrastructure.

A romantic suitor who truly loves you won’t care about those extra five pounds. But footloose companies, not unreasonably, are looking for host cities that have pothole-free streets, reliable transportation networks, well-maintained public parks, and fast Wi-Fi. And despite some notable deviations, maintaining urban infrastructure is mostly up to local governments. Not every city should try to replicate the New York City subway—but make sure residents throughout your city have affordable, predictable ways to reach major job centers, without spending half their day breathing in exhaust fumes (looking at you, Los Angeles). And if you do have a subway system, don’t skimp on maintenance for too long!

Be an honest, consistent, low-maintenance partner.

Local governments define the rules of the game for private businesses. What forms and procedures do companies have to follow to set up new firms? How can you convert an old warehouse into cool offices with open floor plans? Is there a city-specific living wage law or requirements for local hiring? How high are business taxes, sales taxes, commercial property taxes, and local income taxes? Some regulations clearly benefit the health and safety of workers, residents, and the environment. Taxes pay for public services that businesses and their employees want—like good schools, reliable transit, and clean parks. But don’t overdo the regulations, beyond demonstrable public benefits. Be transparent and even-handed in enforcing taxes and regulations. Local governments that aren’t perceived as honest brokers, or that unexpectedly flip their policy positions (see: Seattle head tax), are a huge turnoff to business owners.

Make sure your compassion goes beyond optics.

During the pageant interview, the audience gave you props for volunteer work knitting sweaters for abandoned Chihuahuas. But it takes sustained, thoughtful policies for your city to provide economic opportunity for all its residents. Pay attention to housing affordability, especially for middle- and lower-income families. Make sure public schools teach job-relevant skills, support summer jobs programs, and build pipelines to local employers. From a coldly calculating perspective, it’s hard to sell prospective employers on your city when homeless encampments are prominent features of downtown. As a compassionate mayor, you shouldn’t impose the costs of prosperity on your most vulnerable residents.

Working through this to-do list might improve your shot at getting the rose on next season’s “The Headquarters.” Equally importantly, providing high-quality public services will make your city a better place to live, work, and play for the people already there—established companies and aspiring entrepreneurs, not to mention the residents who pay your salary.

]]>Amazon HQ2 could hurt those in need. Here’s how the winning city can make sure it doesn’thttps://www.brookings.edu/articles/amazon-hq2-could-hurt-those-in-need-heres-how-the-winning-city-can-make-sure-it-doesnt/
Fri, 09 Nov 2018 16:26:02 +0000https://www.brookings.edu/?post_type=article&p=547364By Joseph Parilla]]>Amazon’s real estate team did its homeworkhttps://www.brookings.edu/blog/the-avenue/2018/11/06/amazons-real-estate-team-did-its-homework/
Tue, 06 Nov 2018 19:11:14 +0000https://www.brookings.edu/?p=546725By Jenny Schuetz

More than one year after Amazon announced its intention to establish a new headquarters outside of Seattle, the company appears poised to open two major offices in the New York and Washington, D.C. metro areas. The choice of metro areas likely reflects strong human, financial, and political capital in the New York and Washington, D.C. metro areas. The selection of neighborhoods within those metros—Long Island City in Queens, N.Y. and Crystal City in Arlington, Va.—shows considerable judgment by Amazon’s real estate team. As I’ve written before, both the New York and the District metro areas have high housing costs and tight supply. But within the metros, the two chosen neighborhoods have relatively flexible real estate markets, and some striking parallel features.

Think outside the CBD

Both Long Island City (LIC) and Crystal City are slightly outside the primary Central Business District (CBD) for their regions. LIC is on the western edge of Queens, less than three miles from Midtown Manhattan. Arlington County’s Crystal City is about 4.5 miles southwest of downtown Washington, D.C. Being a bit away from downtown offers some advantages for building a substantial new campus, notably less competition and lower rents for Class A office space. Both neighborhoods have multiple subway and/or bus lines that connect them to the CBD and residential neighborhoods. (One drawback to both metro areas: NYC’s subway and the District’s Metro are facing annoyed riders over deferred maintenance issues. Both regions will need to grapple with transportation infrastructure in any case; Amazon’s decision could provide the impetus to break toxic local politics.)

High-density zoning is Amazon’s friend, NIMBY residents are not

Amazon’s team no doubt spent hours poring over the local zoning rules of possible sites to determine whether they could build the type of high-density, vertical campus they have developed in Seattle. Just looking at New York’s and the District’s skylines, LIC and Crystal City stand out as taller than many adjacent neighborhoods. Both housing and office space in the District of Columbia are constrained by the city’s strict height limit, preponderance of low-density zoning, historic preservation, and opposition from neighboring residents. Much of Manhattan and Brooklyn have similar constraints from historic preservation and NIMBYism. Arlington County’s planning department has designated the Pentagon City-Crystal City neighborhood as a major planning corridor, and the entire area is zoned for high-density offices and apartments. Long Island City has an impressive inventory of newly built commercial and residential skyscrapers, ready for Amazon to move in. Both LIC and Crystal City are mixed-use neighborhoods, with relatively small residential populations.

Build HQ2 and hipster amenities will follow

From the initial announcement of the HQ2 search, commentators argued that local amenities—outdoor recreation, restaurants and bars, and some cultural edginess—would be important factors in location choice. While the NYC and the District metros offer plenty of amenities, it’s not obvious that LIC or Crystal City would crack the top fivehipster neighborhood rankings, partly because they’re so dominated by large commercial buildings. But they’re both close to high-amenity residential areas—Jackson Heights, Astoria, and Williamsburg in New York, Alexandria, Clarendon, and the Southwest Waterfront in Washington, D.C. And 25,000 new Amazon employees will surely draw microbreweries and pour-over coffee bars to their office environs before too long.

Following a year of uncertainty and drama, local sentiment among the host cities will likely be mixed: business and civic leaders eager for an economic adrenaline shot, some residents wary of higher housing costs and increased traffic congestion. Hopefully, policymakers in NYC and District metros will expand their housing supply and upgrade their transportation infrastructure to accommodate both Amazon and existing businesses and residents. Even HQ2 skeptics should breathe slightly easier with the announcement that Amazon has selected two relatively growth-friendly neighborhoods.